Carriers charge for the space a parcel occupies as well as its weight. Multiply length by width by height, divide by the carrier's DIM divisor, and if that number is larger than the actual weight, that is what you pay for.
How dimensional weight works
Take a box 12 by 10 by 8 inches. That is 960 cubic inches. At a common divisor of 139 the dimensional weight is about 6.9 pounds, rounded up to 7. If your product actually weighs 3 pounds, you are billed for 7. You are paying for air.
Common US retail divisors sit around 139 for UPS and FedEx ground and 166 for some USPS services. Your contracted rate may differ, so check your carrier agreement. The Dimensional Weight Calculator lets you set the divisor and shows what oversized packaging is costing you per parcel.
What to do about it
Use a smaller box. Obvious and still the biggest win available. An inch off each dimension of that example box takes dimensional weight from 6.9 to about 4.5 pounds.
Switch bulky void fill for thinner protective material. Air pillows are cheap to buy and expensive to ship.
Use poly mailers for soft goods. Apparel, textiles and anything unbreakable rarely needs a box at all.
Standardise on a few box sizes chosen deliberately rather than whatever the supplier sent.
Why this matters more than it used to
Shipping is now a visible part of the buying decision, and on marketplaces it is often part of the fee base too. On Etsy the 6.5 percent transaction fee applies to the shipping the buyer pays. On eBay the final value fee applies to the total sale including shipping. So an oversized box costs you twice: once at the carrier and again in platform fees.
If you are shipping internationally to US buyers, the end of the de minimis exemption adds a third layer. We covered that in what the tariff change means for your pricing.
Build it into your price
Work out the true landed cost per unit including the billable weight, not the actual weight, then price from there. The Profit Margin Calculator will show what that does to your margin, and the Markup vs Margin Calculator tells you the price that restores it.